I heard the 1099 rules changed for 2026. What is the new threshold?
The 1099 rules did change, and here’s where things stand right now.
For payments you made in 2025, the old rules still apply. You need to file a 1099-NEC for any contractor who received $600 or more during the year. Those forms are due by January 31, 2026, so if you’re preparing for that deadline, you’re working under the $600 threshold that has been in place for years.
Starting with payments made in 2026, the federal threshold for 1099-NEC and 1099-MISC forms rose to $2,000. This means you won’t need to file a 1099 for a contractor unless you paid them $2,000 or more during the calendar year. The threshold will also index for inflation going forward, so it may increase in future years.
The 1099-K rules are separate and work differently. For payment apps and card processors like PayPal, Venmo, Stripe, or Square, the threshold reverted to more than $20,000 in payments and more than 200 transactions. The lower thresholds the IRS kept postponing are not happening.
If you operate in Massachusetts, be aware that the state has its own reporting requirements. Massachusetts keeps a lower threshold than the new federal rules, so you may still need to file state information returns even when federal filing isn’t required. Working with someone who provides bookkeeping and tax services in your state helps you stay compliant at both levels.
One thing that hasn’t changed: all income is taxable whether or not a 1099 is issued. If you paid a contractor $1,500 in 2026, you don’t have to file a 1099 for them under the new rules, but they still owe taxes on that income. And if you received $1,500 from a client, you still need to report it on your return even though they didn’t send you a form.
Even with the higher threshold, tracking contractor payments and collecting W-9s throughout the year is still good practice. You won’t know if someone will cross the $2,000 threshold until the year is done. Our 1099 preparation service handles the tracking, W-9 collection, and filing so you don’t have to scramble in January.
If you have questions about how the new rules apply to your business, reach out for a consultation. The details can vary depending on your state and how you pay your contractors.
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